Wes Read, a CPA and financial planner, walks through checking account features worth paying for and which banks offer them. FDIC insurance covers $250,000 per depositor per bank per ownership category, so a sole proprietor and S-Corp account at the same bank are separate. Regional banks give you a person to call; large banks give you more products.
Let's talk about some of the features of checking accounts. And there's three features I want to mention. And then I want to talk about this concept or this thing called the fdic, which you probably know about. It's the government basically ensuring the safety of some of the cash that you have set aside in a checking or savings account. So I want to dip into that here a little bit. All right. The three features I want to talk about quickly are, number one, with your checking account, you shouldn't have to pay a monthly fee for checking account these days because if you have enough cash, and usually it's a pretty low bar, 20,000, 15,000, 30,000, depending on the bank, if you have enough cash in there, then the banks will waive whatever their monthly fee is. So just make sure you're not unnecessarily paying a monthly fee on a checking account. I've seen banks make that mistake a lot. They charge 49 bucks a month or 29 bucks a month when really they shouldn't be. Number two is the check scanner. And I mentioned this in the prior module. This can be a great convenient way to every day deposit the checks that your patients write out and give to you without having to go to the bank. You can scan them all in, it reads it, it gets deposited. I'm a fan of that. You have to pay a little bit sometimes, but you can, when you set up your banking relationship, perhaps negotiate that they provide that to you at no or very marginal cost. And the third thing is these days in accounting, you want to avoid the system of bookkeeping whereby you are giving a shoebox to your accountant at the end of every month. I still see it a lot. Does it make sense to me to. Takes time for everybody to do that. Instead, banks have this thing called view only access, which is where you give to somebody like me or you know, your bookkeeper or another, another cpa. You give them access to view only the transactions in your business checking and credit card accounts. And virtually again, all the big banks have them and even the smaller regional banks have them as well. It's very few the bank that doesn't have that these days. This allows your accountant, your CPA to go and get the data and bring it into their accounting software to prepare their financial statements for you and do a reconciliation of those statements back to the bank. So make sure your bank offers that. Just double check. Now let's jump into also the benefit of regional versus large banks. And I won't spend too much time on this. Some of it Goes without saying, but big banks, you got really nice looking websites, a lot of great features, you've got access to a lot of different products that big banks can offer. The big banks typically are doing most of these dental loans these days as well. But usually with the big banks you may not have somebody that's your go to that in any moment. You can text or call or email them and they'll respond really quickly. So sometimes you do. And at some of these banks, there are some amazing people I see working at these banks. They always impress me. But at times at the regional bank you have people who will bend over backward for you. I mean they will drive to your practice at the drop of a hat because you need something. And the regional banks can just have that level of sort of attention that may be beneficial. But these days so many transactions are done online, who knows, maybe, maybe it's not that critical. And I'm not really advocating for one over the other, just more highlighting some of the differences between them. All right, now let's look at one of my important comments here is just keep it simple. One bank for your personal and the same bank for your business needs. Ideally. Now I recognize that you can't do that in every situation, but ideally it's one and the same bank. Now a lot of people say, well I like to diversify my banks just to protect my money. Well, this goes into the subject of FDIC protection. FDIC covers as of today, 20, 20, $250,000 per depositor, per insured bank, per ownership category. What does that mean? A depositor, that's you, that's an individual per insured bank. Well, that's the bank per ownership category is the type of account that you're setting up. And the two that are going to matter to you are number one, the personal category. This is going to be your personal checking account or your personal savings account. I believe if you have a family trust account with an.
Revocable trust, which as you sort of build your estate is a very basic thing to do, set up a revocable trust, that's going to be the personal category. A sole proprietorship, keep in mind, is the same ownership category as your personal account. So if you have, let's say at bank of America, you've got a sole proprietor checking account and you have your personal checking account. Those two are going to aggregate together and if it's above 250,000, you're going to be exposed to some amount of your cash that's not covered by the fdic. The second category is S Corp. The S Corporation category or corporate category. An S Corporation or an LLC filing as an S corporation is its own ownership category. So in this sense, you can have $200,000 in your personal and $200,000 in your s Corporation. And because they're each different ownership categories, even with even though there's one depositor, which is you, and it's at one bank, if they're both at the same bank, they're two separate ownership categories, and therefore they each have their own $250,000 protection. Let's look at an example. Dr. Has 200,000 in his or her corporate checking account at Bank. A doctor also has 150,000 in his or her personal checking account, also at the same bank. So that's 50, $350,000 total, which as an aggregate is above the $250,000 of FDIC coverage. However, the FDIC is covered $250,000 per account, so both amounts are fully insured for a total of $350,000 of coverage. Again, because the personal category is different than the corporate category.
All right, I hope that was helpful in thinking a little bit about how you configure your checking account, getting some of those benefits or the features that you want to look for, and then getting some FDIC in protection and ideally trying to keep your structure of accounts simple.
